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US dollar undermined by underwhelming payroll report

currency-newsUS dollar undermined by underwhelming payroll report
The US dollar suffered a setback at the end of last week’s session as USD investors were left disappointed by the latest US payroll report.

Turning back to Sterling, the pound is struggling at the start of this session, with GBP/EUR sliding to €1.1687, GBP/USD tumbling to $1.3005, and GBP/CAD retreating to C$1.6981. GBP/AUD and GBP/NZD have plummeted to AU$1.8804 and NZ$1.9563 respectively.

Coming up today we have the publication of the UK’s latest GDP figures. Will stagnating growth in November exert pressure on GBP exchange rates this morning?

What’s been happening?

The US dollar was in the spotlight on Friday with the publication of the highly-influential non-farm payrolls report.

This saw the ‘greenback’ stumble after payrolls printed below expectations in December, with the US economy adding 145,000 jobs last month against expectations of a slightly stronger increase of 164,000.

Even more worrying for USD investors were the accompanying earnings figures, which showed wage growth slowed to its worst levels since July 2018.

The pound was also struggling at the end of last week’s session following comments by the Bank of England’s (BoE) Silvana Tenreyro.

Speaking in London, Tenreyro suggested that it’s ‘not likely the labour market will tighten further’ and that she is ready to support a rate cut if the weakness in the UK economy persists.

Meanwhile, the euro was left mostly directionless at the end of last week’s session in the absence of any notable economic data from the Eurozone.

What’s coming up?

In the spotlight today we have the publication of the UK’s latest GDP figures.

Economists forecast today’s data will show growth in the UK economy remained at 0% in November, further increasing the odds that GDP stagnated in the last quarter of 2019.

As a result we’re likely to see the pound move lower today as stalling growth puts more pressure on the BoE to start cutting interest rates.

For USD investors the focus this week will be on the latest US consumer price index, with another robust inflation reading potentially offering some support to the US dollar.

Finally, the main catalyst of movement in the euro this week looks to be the publication of the Eurozone’s industrial production figures. A rebound in factory output could help support the single currency.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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